In Russia there was an “explosive growth” in the number of personal funds

According to him, during the entire year 2022 only four personal funds were created; in 2023, their number increased to 16. The low popularity of the tool at first was attributed to its obscurity for a wide audience, lack of judicial practice and the need to be under the supervision of the Ministry of Justice.

Currently, there are at least 122 personal foundations operating in Russia, 106 of which were founded in 2024, said Gayane Shtoyan, family law and estate planning advisor at BGP Litigation. In his words, in recent times confidence in the institute has been growing. “Citizens who formed their capital in the 1990s have reached an age when they begin to seriously think about preserving their assets and guaranteeing their transfer to their heirs in accordance with the law,” the expert explained.

According to María Kukla, partner at FTL Advisers, as of December 19, 123 personal funds had been registered, excluding international ones. Of these, 81 funds were opened after August 8, 2024, when the amendments defining the work of personal funds came into force.

Margulis described the change in legislation as a “turning point” in the fate of the instrument. The amendments removed personal funds from the supervision of the Ministry of Justice and the provisions of the law on non-profit organizations (NPOs); Registration is now carried out only with the tax authority and lasts several days (previously, several months).

In addition, already at the registration stage it was possible to hide information about the founder of the fund and assign a commercial secret to the constituent documents. According to Rusprofile, among the personal funds registered in 2024, 69 have hidden information about the founder in the Unified State Register of Legal Entities.

In 2023, the tax rate on income from a personal fund that is not actively involved in the business was reduced from 20% to 15%. A preferential rate is available for funds with more than 90% of their income coming from passive income.

The concept of “personal fund” appeared in Russian legislation in March 2022. Legally, it is an NPO without membership. The condition for creating a fund is the transfer of property with a market value of at least 100 million rubles.

In essence, we are talking about lifetime legacy funds, which are an alternative to the private foundations and trusts common in the West. After the death of the founder of the fund, the inheritance of property occurs not according to the rules of inheritance law, but according to the rules approved by the founder.